Pro Farmer Evening Report: April 18, 2022

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Winter wheat conditions decline... USDA rates 30% of the U.S. winter wheat crop as “good” to “excellent” as of Sunday. That was down two points from the previous week and three points below the average estimate from a Reuters survey. USDA rates 37% of the crop as “poor” to “very poor,” up a point from last week. 

USDA reported that 7% of the winter wheat crop has headed, two points behind last year and five points behind the five-year average.

Corn planting remains behind average... USDA reports 4% of the U.S. corn crop was planted as of Sunday, compared to 2% last week and 7% last year. The five-year average is 6% planted for mid-April. Analysts surveyed by Reuters expected 5% of the nation’s corn to be planted. In the Corn Belt, 2% of Nebraska’s corn was planted, the same as a year ago and the five-year average. Kansas farmers have planted 12% of their corn acres, up seven points from last week and a point ahead of the five-year average. Iowa, Illinois, Minnesota, South Dakota and Indiana reported no corn was planted yet. Texas leads the country with 64% of its corn planted, up one point from last week and three points ahead of the five-year average.

Soybean planting starts slow... In its first soybean planting progress update, USDA said farmers had 1% of soybean acres planted as of Sunday. That is two points behind last year and one point behind the five-year average and traders’ expectations. No soybeans have been planted in Illinois, Iowa, Minnesota, North Dakota, Missouri, Nebraska, Indiana and South Dakota. Louisiana leads the nation with 23% of its soybean acres planted, 13 points ahead of last year but two points behind the five-year average.

Cotton planting ahead of average... Farmers had 10% of U.S. cotton acres planted as of Sunday, according to USDA. That was a point ahead of the five-year average and one point less than last year.  California led the country with 55% of its cotton planted, up 20 points from last week and 35 points ahead of the five-year average. Sixteen percent of the cotton acres in Texas have been planted, up four points from last week and two points ahead of the five-year average. Georgia has one percent of its cotton crop planted, two points behind average.

Spring wheat seeding behind normal... Farmers had 8% of the spring wheat crop seeded as of Sunday, up two points from the previous week but one point behind the five-year average and traders’ expectations. North Dakota had 3% of its spring wheat planted, nine points behind last year and one point behind the five-year average. Montana farmers have planted 10% of their spring wheat, four points ahead of the five-year average. Minnesota has none of its spring wheat planted, four points behind the five-year average. South Dakota farmers have 25% of their spring wheat planted, three points ahead of average.

Snow to delay Northern Plains planting... The far Northern Plains and southeast Canadian Prairies will likely see two more snow events in the coming week that will further delay planting, according to World Weather Inc. Within the past week, two storms have produced substantial amounts of snow in North Dakota, Manitoba and southeastern Saskatchewan with lighter snow amounts in surrounding areas. As of April 18, much of North Dakota (outside of the southeast corner) into southern Manitoba and southeastern Saskatchewan, generally has four to 20 inches of snow on the ground.

World Weather forecasts there are two more storms predicted for the region in the next two weeks. The first storm is expected tonight into Wednesday with strong winds. The winter storm late Thursday and this coming weekend could also dump six to 12 inches of snow with locally greater amounts in southern Manitoba, northern North Dakota and areas of eastern and southern Saskatchewan. Winds will also be elevated and likely promote another round of blizzard or blizzard-like conditions. 

As a result, World Weather says farmers are not likely to be able to get into the fields in the area until early May or even later, depending on the amount of warming that follows this event.
 

U.S. banks’ commodity trading risk exposures increase... Goldman Sachs Group Inc and JPMorgan Chase & Co commodity trading risk has increased, according to the companies’ first-quarter earnings disclosures. Reuters reported Goldman Sachs’ average daily Value at Risk (VaR) in commodities totaled $49 million in the first quarter of 2022, up from $32 million in the previous quarter and its highest for over a decade. VaR shows how much money it could lose trading a particular asset in a single day. In equities trading, Goldman’s average VaR was $33 million and $25 million in currency trading. JPMorgan's average daily trading VaR in commodities rose to $15 million during the first quarter, up from $12 million the previous quarter and surpassing $12 million for equities and $4 million for foreign exchange. Citigroup’s most recent disclosures showed VaR in commodities was up year-on-year for each quarter in 2021, peaking at $48 million at the end of the second quarter. Morgan Stanley, which has cut the size of its commodities trading business since the financial crisis, does not break out its VaR by asset class.

NOPA reports record March crush... Last Friday, the National Oilseed Processors Association (NOPA) said its members crushed 181.8 million bu. of soybeans in March, up 16.7 million bu. from February and 3.8 million bu. from last year. It was a new March record. The NOPA data implies a full monthly crush at 194.5 million bushels. Last year, March’s total soybean crush was 188.2 million bu.

NOPA reported soyoil stocks at 1.9 billion lbs., down 152 million lbs. from the previous month. The implied total March use at 2.3 billion lbs. and daily use at 74.2 million lbs. are new records. The previous record monthly use was 2.2 billion lbs. and daily use was 70.6 million lbs. in May 2020.
 

Ukraine warns of deteriorating grain on ships... Mykola Solskyi, Ukraine’s agriculture minister, warns the 1.25 MMT of grains and oilseeds loaded in 57 vessels but unable to ship due to the Russian invasion could deteriorate in quality soon. He noted the grain condition depended on the condition of the vessel cargo holds. However, he stressed that quality issues could arise and that cargo could be spoiled if stored for more than three months. Most of the ship captains most likely do not know if there are quality issues and they probably did not plan to keep the grain loaded in the ships this long.

World Bank cuts global growth forecast... The World Bank cuts its global growth forecast for 2022 from 4.1% to 3.2%. The largest part of the reduction in growth was a 4.1% contraction in Ukraine, Russia and areas around those countries. The World Bank predicts Ukraine’s economic output will drop by 45.1% and Russia’s 11.2%. It reduced the economic growth forecast for central Europe (Bulgaria, Croatia, Hungary, Poland and Romania) from 4.7% to 3.5%.

Russian fertilizer shipments continue to Brazil... Despite concerns that sanctions would limit Russian fertilizer shipments to Brazil, shipping data shows fertilizer is still being shipped, Reuters reported. At least 24 vessels carrying almost 678,000 MT of Russian fertilizers will reach Brazil in the following weeks. Despite sanctions against Russia, 11 of the 24 vessels left Russian ports after Feb. 24, when the war started. Most are carrying potassium chloride used for soybean and corn production. The most recent cargo left Russia on April 4. Overall, Brazil’s fertilizer imports and raw materials used to make plant nutrients rose by 24.6% to 9.795 MMT in the first quarter, according to Siacesp, an industry group.

Higher fertilizer prices could cut this year’s world rice crop... Higher global fertilizer prices could lead to reduced global rice production. The International Rice Research Institute predicts yields could drop 10%, translating to a loss of 36 MMT of rice, or the equivalent of feeding 500 million people. However, that is a very conservative estimate, according to an agricultural economist with the organization. While other crop prices have kept up with higher fertilizer prices, rice prices have lagged due to ample production and existing stockpiles. That is leading to farmers cutting back fertilizer use in rice. However, many governments are aware of the situation and politicians could react as rice is a staple for hundreds of millions of people, especially lower-income groups.